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LABOR PRACTICES

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People are the lifeblood of any organization, and indeed CNH Industrial considers its employees as its top priority.

Efforts to implement an inclusive recruitment practice, and the optimal use of available talent in the different Regions, is the basis for developing the ability to attract a diverse and qualified workforce. The Company strives to provide its employees with a compensation system comprising a number of different components, believing this to be a key factor in retaining employees. Base salary, benefits, and long-term incentives are determined by marketdriven benchmarks, therefore ensuring fair and objective treatment for all employees in the different markets around the world. To develop the most talented individuals, CNH Industrial offers challenging, rewarding careers where employees never stop learning and, above all, see their value recognized (see also page 83).

EMPLOYMENT

A total of 98% of the Company’s current employment contracts are no-term, 99% of which are full-time. Fixed-term contracts represent approximately 2% of all contracts. During the year, 1,189 contracts were changed into no-term contracts, 10.8% of which refer to female employees. Around 1% of the Company workforce is employed part-time, of which approximately 73% are women (see also page 249). Fixed-term hiring takes place in response to a temporary need for personnel, in line with applicable laws and the provisions of the Collective Labor Agreement (CLA).

As at December 31, 2014, agency contracts accounted for around 3,657 personnel, of which 77% in EMEA, 10% in NAFTA, 1% in LATAM, and 12% in APAC. This type of contract is entered into or renewed, in compliance with the applicable legislation and CLA provisions, in relation to business needs, and thus ultimately subject to variation in relation to the specific market requirements.

As of December 31, 2014, CNH Industrial had 69,207 employees, a decrease of 2.8% on the previous year. Part of this change was due to the difference between new hires (5,016) and departures (7,800) during the year.

EMPLOYEE TURNOVER

(no.)

2014

2013

2012

Employees at January 1

71,192

68,257

66,998

New Hires

5,016

8,753

8,100

Departures

(7,800)

(6,967)

(7,159)

D scope of operation

799

1,149

318

Employees at December 31

69,207

71,192

68,257

Most hiring occurred in EMEA, with 36% of total new hires. As many as 53% of new hires were aged thirty or less.Female employees accounted for 18% of the year’s new hires. In 2014, approximately 81% of new hires were employed under no-term contracts.

NEW HIRES

Among new hires, 256 were recent graduates, a drop compared to the previous year overall, yet in line with the decrease in hiring in the salaried, professional, and manager categories.

TALENT ATTRACTION

(no.)

2014

2013

2012

New graduates recruited

256

343

439

Traineeships

3,411

3,256

2,921

In 2014, approximately 7,800 people left the Company, 15% of which were collective redundancies following the reorganization or rationalization of operations, in some instances initiated in previous years. Wherever possible, redundancies were managed through temporary social welfare mechanisms provided for by law and through social programs, aimed at minimizing the impact on employees, established in collaboration with trade unions.

Specifically: 65% of collective redundancies were managed through contract terminations at the initiative of the Company, with payment of severance packages and other supporting measures as per agreements with unions/ employee representatives; 20% through voluntary resignations with exit incentives; and 10% through retirement/ early retirement schemes. The residual 5% were exits related to collective dismissals, including individual voluntary resignations at sites affected by collective redundancies (1.5%), and employee exits due to the end of their recall right according to the applicable permanent layoff rules (3.5%) see also pages 106-109.

CNH Industrial also provides opportunities for transfers between segments and countries. During the year, four hundred CNH Industrial employees transferred between countries, or between legal entities within the same country. As regards departures, the highest percentages were reported in LATAM (37%) and EMEA (30%), in the group aged thirty or less.

In its commitment to ensure an inclusive work environment and equal opportunities for all employees, CNH Industrial adopts a progressive total compensation system based on equitable and fair criteria. At the heart of the Company’s compensation philosophy lies the concept of meritocracy, which acknowledges the value of a high performance culture and the importance of a market-driven approach. To support this, the Company has defined a compensation system that comprises a number of different components. The comprehensive package rewards employees for their contribution to the Company’s results, provides development opportunities, and allows them to share in the business success they help create. Base salary, benefits, and long-term incentives are determined by market-driven benchmarks, therefore ensuring fair and impartial treatment for all employees in the different markets around the world. The specific criteria for adjustments focus on closing competitive gaps with respect to market position, giving priority to top performers. Variable compensation and career development are impacted by individual contributions, which are vigorously evaluated through a Performance and Leadership Management program that is deployed consistently throughout the entire organization (see also page 83).

In the assessment of annual performance, the same metrics and methodology are applied to all eligible employees worldwide. Additionally, CNH Industrial employs a formal process to monitor the application of its core equity and fairness principles to compensation levels, annual salary reviews, and promotions. These reviews are based on standard criteria, and do not allow manager discretion for those receiving compensation actions. Combined together, all of these measures ensure the Company’s total compensation system, in line with all other internal processes related to people management, effectively contributes to equal opportunities and fair treatment for all individuals regardless of age, gender, race, religious belief, or other such factors or attributes.

Local Minimum Wage

In many countries, minimum wage levels are set by law and, in some cases, are subject to variations by Region/ state or other criteria. Where no specific law exists, a minimum wage is often established by collective bargaining agreements between employer associations and trade union representatives. This is the case in Italy, Germany, and Belgium, for example, where pay and employment conditions are negotiated at regional or national level, with the possibility of further agreements on their application or supplementary terms and conditions at Company level. Lastly, minimum wage levels are also established on the basis of specific economic, social, and political circumstances and, therefore, do not allow for cross-border comparisons.

To evaluate the adequacy of entry-level salaries in each country, in 2014, CNH Industrial carried out an analysis in a number of countries, representing 99% of its employees. In all countries, CNH Industrial entry-level salaries2 were at or above the statutory minimum or the levels set by non-company collective labor agreements, as can be seen in the graph.

EMPLOYEE BENEFITS

Benefits provide employees with value beyond salaries and cash incentives, and can be a significant part of the total reward package received. For this reason, CNH Industrial offers a competitive range of benefits, normally available to all full-time employees, and in many countries also provides competitive benefits to part-time or temporary employees.

Benefits differ according to an individual’s level of remuneration and country of employment, and depend on local policy.

CNH Industrial conducted a survey on 99% of its workforce worldwide, covering all major Company sites as at October 31, 2014, on the availability and adoption of various Company benefits (supplementary health plans, financial support for those with accident-related permanent disabilities, life insurance, and employee cafeterias or meal vouchers).

(a) Includes benefits such as Company cars, housing, and interest-free loans.(b) Includes kindergarten, free gymnasiums for children, assistance with homework, summer camps/holidays, and other child care services.(c) Includes free gymnasium access, gym/fitness courses, and other sports initiatives.(d) Includes nutrition coaching, training on stopping smoking, medical check-ups, medical screening, and other wellness programs. See also page 95.(e) For more details on flexible working schemes and leave of absence see also page 97.

Health care plans are available for CNH Industrial employees, and about 67.3% of the total workforce has joined one. There are also childcare services in place to meet employees’ needs and help them be more effective in their working life. Finally, CNH Industrial promotes a healthy lifestyle through comprehensive wellness programs (see also page 95), and facilitates access to dedicated sports facilities.

(2) In accordance with the GRI-G4 guidelines, entry-level salary refers to the full-time wage offered to an employee in the lowest employment category, on the basis of Company policy or agreements between the Company and trade unions. Interns or apprentices are not considered. For each country, results are based on the segment with the lowest entry-level salary. Figures reported are as at October 31, 2014.

Supplementary Pension Plan

According to the survey3, approximately 88.2% of employees were eligible for a supplementary pension plan, 73.3% of which joined such a plan, representing 64.6% of those surveyed.

Supplementary pension plans fall into two categories:

defined contribution pension plans, in which contributions (by the employee, the Company, or both) are defined at the outset, and benefits paid out depend on the total payments into the pension fund and the financial returns of the fund itself

defined benefit pension plans, in which benefits paid out to employees are defined at the outset, while contributions may vary over time to guarantee the pre-defined benefit levels.

Nearly all CNH Industrial subsidiaries participate in supplemental health care plans, which in most cases are insurance-based. Levels of coverage vary from country to country depending on the public health care system, tax and regulatory restrictions, and local market conditions.

In Italy, in addition to the services provided by the national health system, all CNH Industrial employees and their family members have access to supplemental health care plans: FASIF for hourly, salaried, and professional employees and FISDAF for managers. The two plans were developed in agreement with trade unions. Two thirds of expenses covered by the FASIF and FISDAF plans are funded by CNH Industrial and the remaining third by the employee. Hourly and salaried employees also pay an additional amount for any family members enrolled. If an employee uses public health care facilities, the plans reimburse any expenses not covered by the national health system. On the other hand, if an employee uses private facilities, the plan provides high cover ceilings, with full payment of expenses incurred at approved health care facilities, and partial reimbursement of specific expenses incurred at other non-approved medical practices and facilities. Prevention programs with regular check-ups and a maternity package are also provided. In 2014, the health care plans in Italy provided services to more than ten thousand employees plus their family members: FASIF to 6,350 hourly and salaried employees and around 3,400 professionals, and FISDAF to 448 managers. FISDAF also assists managers after retirement and their widows, on a voluntary basis.

Childcare Services

Balancing work and childcare is a challenge that many of CNH Industrial’s employees face, particularly those with young children. In order to assist employees in better managing their time and resources, CNH Industrial offers a number of childcare support options to its employees throughout the Regions.

In several locations throughout the EMEA Region, CNH Industrial helps in arranging access to local daycare centers. One of various services offered to employees is the Mirafiori Baby nursery in Turin (Italy), which offers assistance to parents of children aged three months to three years. At other locations, CNH Industrial joined forces with companies in the vicinity of its sites to set up childcare options in the community. In 2014, it renewed a partnership with local companies in Jesi (Italy), assisting ten employees with children aged three years and under, while in Sankt Valentin (Austria) a kindergarten was opened for employees’ children (three years and under) in conjunction with another company in the area. For the sixth year, CNH Industrial continued its collaboration with other local firms to make three daycare centers available to employees in Venissieux (France).

Alternatively, CNH Industrial also offers direct childcare assistance to parents with young children, allowing employees to select the best daycare option. In Spain, 588 employees and a total of 643 children benefited from direct funds provided by the Company to parents of children aged three years and under for use towards daycare centers of their choice. In the UK, the Company offers a flexible benefits package to salaried employees, which allows them to allocate a portion of their health care funds towards childcare expenses, while in the US, eligible employees have the option to set aside pre-tax sums for childcare by contributing to a Dependent Day Care flexible savings account offered by the Company.

School supports is one of the various childcare services CNH Industrial offers its employees. In Brazil and Argentina, for example, the Company provides school kits, through a special program, for elementary and secondary school children (six to 12 years). In 2014, 1,485 school kits were delivered in Sete Lagoas (Brazil) and 901 in Argentina.

In Spain, parents with children aged between three and 16 benefitted from direct funds from the Company for school support.

The Company recognizes the academic excellence of employees’ children through several grants and scholarship programs at both corporate and regional level.

The largest and most significant of these is the Company’s Student Achievement Awards. This program honors the children of employees for their academic excellence and is open to students with a high-school or university diploma or a university degree. The Awards policy is overseen by the Grants and Scholarship Committee and implemented through regional committees that have contacts in all countries involved. The initiative covers all countries where the Company has a significant presence, and reflects its commitment to promoting growth and development opportunities for young talent in an increasingly globalized marketplace. In 2014, two hundred grants and scholarships totaling approximately $330 thousand were awarded worldwide.

On a regional level, for example, CNH Industrial supports the Niños de Mejor Promedio program in Mexico, which awards the children of employees for excellent school results. The main purpose is to motivate children to develop positive work ethics and habits and, in 2014, 274 children with final grades between 9 and 10 received the award. In India, a program has been in place for seven years to give recognition to the children of employees. In 2014, 22 children were awarded Special Talent scholarships.

Moreover, in Italy, CNH Industrial organizes summer camps for hundreds of employees’ children between the ages of 8 and 16. Options for children include camps at the seaside, in the mountains, and even a Juventus soccer summer camp. In 2014, in addition to these offerings, the Company introduced a new two-week study/ vacation English learning summer camp, held in Italy or England.

Sports Facilities

Supporting physical fitness and teamwork is an activity fostered by CNH Industrial for employees in all of its Regions. The Company offers its employees a variety of opportunities to participate in recreational sports, including gym memberships, tournaments, and race sponsorships.

A number of plants worldwide provide onsite fitness equipment and/or classes where employees can exercise: Sankt Valentin (Austria), Trappes (France), Lugano (Switzerland), along with sites in the UK and USA. In other locations, the Company works with local fitness clubs, such as Sisport (Italy), to provide employees with discounted memberships to gyms for swimming and other sports.

In the UK, as part of their flexible benefits, employees are offered gym memberships or participation in cycling programs.

In Russia and Poland, the Company provides rented spaces where employees can organize matches, such as Friday soccer games or volleyball, while at three plants in the US, CNH Industrial sponsors recreational sports leagues for young people and adults.

Sports clubs and tournaments are also popular among employees. In Antwerp and Zedelgem (Belgium), seven hundred employees participated in the 11 different clubs organized by the Company. In Turin (Italy), three hundred athletes participated in 15 competitive sports, in partnership with other companies. In India, 190 employees participated in cricket and volleyball tournaments.

Sports also provide a great opportunity for employees to interact. CNH Industrial supports the participation of its employees in a variety of foot races, including the Chase Corporate Challenge in the USA and Australia.

In 2014, in Trappes (France), 14 female employees took part in la Parisienne race, which raised money to support breast cancer research (see also page 118).

In Brazil, a Sports Day is organized each year for six thousand employees and their families, offering everything from volleyball to training facilities, gymnastics, dancing, and activities for children. In India, Sports Days events are held lasting for three days.

Courtesy Services

To assist employees in maximizing time and saving money throughout the work day, CNH Industrial offers a variety of courtesy services at its sites.

At several of its locations, including in Brazil, China, Italy, Spain, Czech Republic, Poland, Russia, the USA, and Australia, CNH Industrial continues to offer on-site cafeterias or other meal services for its employees. Other services, like on-site dry cleaning drop-off and pick-up, are available at plants in Italy and the USA. At three facilities in Italy, employees are able to renew their driver’s licenses at work, and in Brazil, employees are able to do their banking onsite as part of the Internal Banking Program.

In the NAFTA Region, employees can benefit from discounted tickets to local museums and zoos through the Company’s corporate memberships. Through negotiated employee purchase plans, employees in the USA can also save money on certain expenses, such as phones or computers. In the UK, the flexible benefits portal gives employees information on discounts they can receive at a variety of shops.

In India, an Employee Help Desk Service was started in 2014 to provide support to all plant-based employees for activities such as train ticket reservations, payments of school fees, check deposits, and miscellaneous bill payments.

Furthermore, in Regions where traffic congestion is a particular concern, CNH Industrial eases employees’ commutes to work by offering flexible working hours (see also page 97), bus services, or memberships of carpooling programs (see also page 99).

LONG-TERM INCENTIVE PROGRAM

In 2014, CNH Industrial introduced a new long-term incentive program, covering a five year performance period, 2014-2018, designed to engage and retain key leaders across CNH Industrial. Awards were granted to approximately four hundred managers worldwide with the aim to strengthen key leaders’ commitments to achieving the Company’s long-term goals.

GRIEVANCES ON LABOR PRACTICES

In 2014, formal labor grievances leading to collective disputes were filed worldwide against the Company by either works councils, employee representative bodies, or unions.

In Spain, two complaints (both in favor of a group of employees) related to school subsidies for employees’ children, as envisaged by the Collective Labor Agreement (CLA) in force, were filed by a union, and addressed and resolved by the conciliation body in charge of the mediation.

One grievance, related to the lack of information provided to the works council as per general local practice, was addressed and resolved by a conciliation body established by the industry/area-specific CLA in Belgium.

Two grievances - one related to the transfer of employees from a company belonging to the joint venture partner, and one related to the suspension of three employee-members of a union - were filed in South Africa and settled before the Dispute Resolution Center of the Motor Industry Bargaining Council.

The aforementioned extra-judicial mechanism is common practice at unionized sites/plants in the USA and Canada for individual complaints on various matters, provided that trade unions file their grievances against the Company according to the procedures and mechanisms set forth by the applicable CLA.

Almost 39% of the 126 grievances filed in North America in 2014 were related to attendance, 12.7% to issues associated with either CLA or Company policy violations, 11.9% to overtime and pay, 10.3% to job performances, and the same percentage to misconduct. The remainder was equally divided between grievances related to termination and to discipline. In total, 72% of the grievances were resolved, with the highest percentage of resolutions relating to misconduct (92%), attendance (90%), and overtime and pay (87%). If a grievance cannot be resolved by the conciliation body, the employee can appeal to an arbitrator.

However, there have been very few such cases in North America, and just one ruling on labor matters against CNH Industrial in the past four years. A similar practice is in place at certain US non-unionized sites, where conciliation bodies, known as Peer Review Committees for Suspension and Termination (see page 82), are established according to Company policy. In 2014, these committees dealt with 37 complaints and resolved all of them.

In the LATAM Region, two complaints were filed against the Company in Venezuela, and addressed by the conciliation body established as per Company agreement. Both disputes - one related to the applicable CLA, and one related to dismissals resulting from a restructuring plan - were settled by the mediator.